US-based private equity firm Cerberus is in talks to acquire the struggling UK-based high street lender The Co-operative Bank (Co-op Bank).

Initially, Co-op Bank said that it has received a non-binding offer from a “financial sponsor with knowledge and experience of investing in European financial services businesses regarding the possibility of a sale of the bank and/or the holding company.

“The Bank continues to be in discussions with this financial sponsor, although such discussions remain at a preliminary stage.

“There can be no certainty that discussions with this financial sponsor will progress further, or that any binding offer will be forthcoming nor whether the Bank’s ultimate shareholders will find the terms of a binding offer (if any) acceptable.”

However, media reports revealed that Cerberus Capital Management, which holds a 5% stake in Germany’s Commerzbank, has submitted this bid.

Cerberus also owns a 3% stake in Frankfurt-based investment banking company Deutsche Bank.

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Cerberus is currently in preliminary discussions with the board and shareholders of the Manchester-based bank for a deal.

Since 2013, Co-op Bank has been grappling with bad loans worth £1.5bn (nearly $2bn), following the acquisition of Britannia Building Society in 2009.

Then, in 2017, the lender agreed to a £700m ($930m) bailout agreement with US hedge fund owners BlueMountain Capital, GoldenTree Asset Management and Silver Point Capital.

A successful takeover will result in the transfer of ownership of the loss-making bank from these bondholders to Cerberus.

Cerberus might pay £200m ($265.7m) for the business, Sky News reported citing one insider.

In the UK, the Co-op bank has onboarded as many as 3.3 million personal banking customers.

In 2018, the lender also approached the UK banking giant Barclays for a merger. However, the discussions did not move beyond the exploratory stage.

The latest discussion comes amid a five-year turnaround plan at the bank and adds to the list of possible takeovers in Europe.

Spanish banking group BBVA is in talks with the representatives of smaller rival Banco Sabadell for a potential merger.

Further, Banco Santander agreed to acquire the technology assets from the European merchant payments business of insolvent payments firm Wirecard.

Meanwhile, NatWest Group is reportedly looking to acquire Sainsbury’s Bank from the UK-based supermarket giant Sainsbury’s.